The (Incredibly Silly) 1-Percent Rule

As my colleague Steve Bousquet reports today, the Florida Commission on Ethics appears poised to dismiss charges against former Chief Financial Officer Tom Gallagher for trading insurance stocks while serving as Florida's insurance commissioner.

Does this ruling "clear" Gallagher by declaring that he DIDN'T trade insurance stocks while he was Florida's insurance regulator? That the charges were completely bogus?No, that's not what it means.

It means that under Florida's ethics laws, it can still somehow be legal to buy and sell insurance stocks even if you are the state's insurance commissioner regulating those companies -- because Gallagher never owned more than 1 percent of the companies in question.

His holdings -- worth no more than $182,000 in one case, and $13,600 in the other -- didn't crack the 1-percent rule. A staff recommendation to the Ethics Commission refers to the investment as "minimal."

So whether you are "ethical" in Florida, it would seem, depends on whether you sink your $182,000 into a big company that you're regulating, or a small one.

I got an idea. Call me kooky, but maybe it ought to be flat-out illegal for state regulators to own stock in companies that they regulate.

Having said that, if this truly turns out to be the Ethics Commission's ruling, and the 1-percent rule is the basis for it, then couldn't they have given Gallagher this ruling a lot earlier?